WINNIPEG, Manitoba--The November canola contract rose above the C$800 per tonne mark for the first time in nearly a month during the week ended Aug. 23. However, it wasn't without some turbulence over the last two days of trading.

On Aug. 22, the November contract lost C$13.40 per tonne to close at $796, before gaining C$10.50 the next day to break the C$800/tonne psychological level again. On Aug. 22, October Chicago soyoil lost 2.44 U.S. cents per pound before regaining nearly half (1.16 cents/lb.) on Aug. 23.

Ken Ball, a trader with PI Financial Services in Winnipeg, said that in relative terms, canola is "far too cheap" and the oilseed is taking its cues from soyoil.

"Whenever the soy margins are strong, canola will seem to lag on the way up and whenever they're weak, canola will lag on the way down," Ball said. "The soy markets seem nervous about the (hot and dry) weather...The weather for the soy crop over the next two weeks doesn't look good, so that should keep canola well-supported."

Another factor which may affect canola prices in the coming days is Statistics Canada's principal field crop supply/demand estimates, which will be released on Aug. 29. The report will have the first model-based production numbers of the 2023-24 marketing year, but Ball is already skeptical on whether or not the figures will reflect the true production numbers.

"This first report will be as of July 31. By the time they release the data next week, it's Aug. 29. I'm not sure if it's worth reading this data because in two weeks, we're going to get a report (from Agriculture and Agri-Food Canada) as of Aug. 31 which will be much more useful," he explained. "But everybody will look at it because it gives a rough idea of how the crops look like...I'm not sure anybody's going to really trust these numbers."

Ball believes that the likelihood of reduced soybean yields in the United States due to drought will raise soybean prices and, in turn, give canola prices a boost.

"Canola should be very well-supported and may have some upside over the next week or two," he added.


Source: Commodity News Service Canada, news@marketsfarm.com


(END) Dow Jones Newswires

08-23-23 1640ET